What does a "real estate appraisal" typically assess?

A real estate appraisal primarily assesses the economic value of a property based on current market conditions. Appraisals involve an in-depth analysis of various factors such as the location, condition, and features of the property, as well as comparisons to similar properties recently sold in the area. This process enables appraisers to determine an accurate market value, which is crucial for buyers, sellers, lenders, and insurers.

Assessing the economic value involves using methodologies such as the sales comparison approach, the cost approach, and the income approach, depending on the property type and what is most applicable to that particular assessment. The outcome influences decisions in transactions, lending, and investment strategies significantly.

While the historical value of a property can provide context, it does not directly impact current market value, making it less relevant in an appraisal context. Environmental risks and rental income potential are factors that might be considered in broader property evaluations or investment analyses, but they are not the primary focus of a standard real estate appraisal. Hence, the appraisal centers on determining the property's economic value to reflect its standing in the current real estate marketplace.